The report, which is based on a survey of 35 angel groups across Canada that represent 3,300 active angels, was developed in partnership with the Government of Canada, BDC Capital, RBC, Ryerson Incubate, and Innovate Network Canada. The report highlights key trends and statistics of Canada’s angel market, and finds that more angel groups are participating in larger syndicated deals and follow-on investments in Canada.
According to the report, Canadian angel groups made 418 investments in 2016, investing a total of $157.2 million in companies. The report also states that 58 percent of all syndicated deals made in 2016 involved a combination of multiple syndicated partners.
NACO’s report also notes that investment activity is dominated by the information-communication technology (ICT) sector, which makes up 45 percent of total deals and 26 percent of the dollars invested, followed by the life sciences sector, which accounts for 15 percent of the deals and 45 percent of the amount invested.
“These findings infer that angel investors are doing proportionally more investment in ICT, but investing more dollars in life sciences,” NACO wrote in a statement. “This, in part, can be due to the set-up and expansion cost differences between running a life sciences company versus an ICT organization.”
“Increasingly, the Angel network is filling the seed to growth stage in the investment scale.”
Geographically, the report shows that angel investment activity is distributed unevenly across Canada, with Central Canada (Ontario and Quebec) attracting 61 percent of investments in 2016, while Western Canada attracted about one-third of investments and Eastern Canada attracted one percent of investments. This is not a surprising figure as 80 percent of angels are located in Central Canada, 17 percent in Western Canada, and three percent in Eastern Canada.
While a majority of investments have been made in Central Canada for several years, NACO’s report found that on a per capita basis, Western Canada had the most angel investment activity, slightly ahead of Central Canada, and that in 2016, investments shifted from a focus on deals within an angel’s home city to investments within the same province.
Yuri Navarro, CEO of NACO, said the 2016 report is “very encouraging” as it shows a trend towards greater collaboration between angels and other partners.
“Increasingly, the Angel network is filling the seed to growth stage in the investment scale, stepping in to provide critically needed bridge capital to startups as they mature into scalable ventures,” said Navarro. “This growing angel funding bridge will not only generate more positive investment outcomes, it also helps to build stronger late stage innovation companies that strategic investors can support.”
The NACO report also indicated that the average deal size reached $1.7 million, a mean which is 49 percent greater than the 2015 figure. Overall, the report suggests that angel activity in Canada is increasing, as there was almost a 50 percent increase in the number of investments in 2016, coupled with a 15 percent increase in the amount invested.
“I am pleased to see the results in this report, which paint a vibrant picture of Canada’s Angel market,” said Bardish Chagger, Minister of Small Business and Tourism. “The Government of Canada is committed to supporting our entrepreneurs and small businesses grow and scale up, and angel groups across the country are doing great work to invest in, and work with startups and small business entrepreneurs. They not only provide important investments, they help translate ideas into new products and services, accelerate business growth, and propel entrepreneurs from the startup phase to international success.”
View the full report here.